Economics of Information Technology
Hal R. Varian
University of California, BerkeleyJuly 2001Revised: March 23, 2003
This is an overview of economic phenomena that are importantfor high-technology industries. Topics covered include personalizationof products and prices, versioning, bundling, switching costs, lock-in,economies of scale, network eﬀects, standards, and systems eﬀects.Most of these phenomena are present in conventional industries,but they are particular important for technology-intensive industries.I provide a survey and review of recent literature and examine someimplications of these phenomena for corporate strategy and publicpolicy.
This is a revised version of the Raﬀaele Mattioli Lecture, delivered at Bocconi Uni-versity, Milano, Italy, on November 15-16, 2001 and the Sorbonne on March 6, 2003. Itis based, in part, on the paper I delivered at the Federal Reserve Bank of Kansas CityJackson Hole Symposium, August 2001. Research support from NSF grant SES-9979852and is gratefully acknowledged, as are helpful comments by Erik Brynjolfsson, Joe Farrell,Paul Klemperer, and Kevin Murphy. Email for comments: